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Single Touch Payroll (STP) has certainly given bookkeepers and their clients a lot to think about. The Australian Taxation Office (ATO) has taken a measured and considered approach to its implementation, which has been appreciated by many. However, it was always clear that this approach would evolve once businesses had sufficient time to prepare for the STP implementation phase.
The ATO’s Approach to Single Touch Payroll
Going forward, the expectation of the ATO will rightly shift to an oversight model. This model acknowledges the complex nature of STP implementation for small businesses but also assigns appropriate penalties for those who don’t comply with the new reporting requirements. The ATO has informally advised that they aren’t looking to directly pursue and impose penalties for small and closely held entities for the next 12 months. This grace period allows these entities time to settle into the new reporting regime.
Importance of Meeting Deadlines
The Institute of Certified Bookkeepers strongly recommends that all small businesses report by the current 30th September 2019 deadline. Small and closely held entities not reporting by this deadline may benefit from an exemption term upon application, thus avoiding the risk of attracting penalties. However, it is important to note that this exemption term will end on 30 June 2021. Concessions for larger employers no longer apply, making it crucial for all businesses to comply with the STP requirements.
Penalties for Non-Compliance
The ATO penalty documentation now lists that failure to lodge STP reports is considered a failure to lodge event. A failure to lodge penalty is calculated at a rate of $210 per 28-day interval of lateness or part thereof, capped at 5 penalty units. Companies with turnover between $1-20 million will see this penalty multiplied by two ($420). Large companies with turnover in excess of $20 million will see their penalty multiplied by 500 ($105,000).
These recent changes to the ATO’s penalty documentation are available for review. According to the ATO website, each penalty event will result in a $210 penalty assignment, while the cap levels were outlined by Acting Director Amanda Lehmann at a recent ATO presentation. Ms. Lehmann noted that only a minute number of letters have been sent to large firms neither lodging nor applying for deferral.
Ensuring Compliance
Clearly, it’s in everyone’s best interests to ensure STP compliance. If you need to apply for STP lodgement deferrals, please contact us. Ensuring compliance with Single Touch Payroll not only helps avoid penalties but also streamlines payroll processes, making it easier for businesses to manage their obligations.
By understanding the importance of Single Touch Payroll and adhering to the ATO’s guidelines, businesses can navigate this complex landscape more effectively. The transition to STP may be challenging, but with the right approach and timely compliance, it can lead to more efficient and transparent payroll management.
